New business market: A half of two quarters – Martin Jones
After an incredibly busy first quarter of the year, the new business market showed a dramatic decline in the second quarter, resulting in a cumulative decrease of 24.3% over the first half of 2016 in terms of the number of appointments made.
The reason for this marked downturn can be laid at a number of doors, beyond everyone drawing breath after a frantic 12 weeks of pitching. The run up to the election caused some confidence wobbles, and renewed concern about the potential outcome of the Brexit negotiations was also unhelpful. At the same time, numerous clients also commenced or reached critical phases in their own internal marketing transformation and internal restructuring programmes. Finally, from a practical perspective, the lack of a “clear run” at pitches caused by the late Easter break and May Bank Holidays also slowed things up a bit.
However, as our measurement only includes reviews where an appointment was made in the first half of the year, it does not include ongoing pitches, of which there were a significant number and, therefore, the true state of the market can only really be judged at year end.
It is also worth noting that there appear to be more discussions between clients and agencies around moving away from the traditional discipline-based approach. These discussions on new working models fall more into the area of business development than new business and, therefore, will inevitably have an impact on traditional pitches.
In terms of specific disciplines, in the first half of 2017 the year on year changes were as follows:
H12017 vs H12016
Advertising appointments were down 3.2% in the first six months of 2017 compared with the same period in 2016. The number of £20 million plus advertising clients was also down on 2016 with five appointing a new agency (Dixons Carphone, Dreams, KFC, Vodafone, and Walgreen/Boots) in the first half of the year, compared with eight in 2016. However, of the 2017 appointments, only Dreams and KFC were open reviews.
As previously mentioned, the figures only reflect those clients that made an appointment, and a number of significant pitches were still being contested at the end of the half year.
Integrated agency appointments were down over a third year on year (-39.3%) but remained at the same low value level as in previous years, although the figures were somewhat inflated by the Government frameworks’ desires to make more integrated appointments.
Media agency wins were also down (-38.3%) versus the first half of 2016, but did include a number of significant national and global appointments including IAG, Ladbrokes Coral, Molson Coors, P&G, PSA, Sainsbury’s (eventually) and Walgreen/Boots.
Clearly, these figures only reflect the first two quarters of the year, and as we write, things appear to be back on track, with the beginning of the third quarter seeing an upward swing in the number of new agency reviews and results announced. Whilst there may be some difference by discipline, we are predicting that by the end of Q3 2017, the overall volume of new business reviews will be consistent with that of the first three quarters of 2016.